CHARLOTTE, N.C. - RXO (NYSE: RXO), a prominent provider of asset-light transportation solutions, confirmed today it has finalized the purchase of Coyote Logistics from UPS. The $1.025 billion transaction elevates RXO to the position of the third-largest brokered transportation provider in North America.
The acquisition is poised to strengthen RXO's market presence by diversifying its customer base and enlarging its carrier network. It promises to offer customers enhanced network density and additional power lanes, while carriers are expected to benefit from access to a greater number of customers, potentially reducing non-revenue generating miles.
Drew Wilkerson, CEO of RXO, expressed enthusiasm about the integration of Coyote's resources into RXO's operations. "This acquisition enables us to provide customers with even more capacity," Wilkerson stated. He emphasized the company's commitment to service excellence, comprehensive solutions, continuous innovation, and strong customer relationships.
Founded in 2006 and acquired by UPS in 2015, Coyote Logistics has now become part of RXO's expanding portfolio. Goldman Sachs (NYSE:GS) & Co. LLC acted as RXO's financial advisor during the acquisition process, with Paul, Weiss, Rifkind, Wharton & Garrison LLP providing legal counsel.
RXO, headquartered in Charlotte, N.C., offers a range of tech-enabled truck brokerage services, managed transportation, and last-mile delivery solutions, leveraging substantial capacity and advanced technology to optimize freight movement through North American supply chains.
This strategic move is expected to enhance RXO's competitive edge in the transportation sector by offering a broader set of logistics solutions to its customers. The information regarding this acquisition is based on a press release statement.
In other recent news, RXO, Inc. has seen several notable developments. The company announced a $350 million stock offering to finance a portion of its acquisition of Coyote Logistics from UPS. This acquisition, valued at $1.025 billion, is expected to bolster RXO's truckload freight brokerage services. The deal's financing strategy, initially anticipated to be a mix of 70% equity and 30% debt, has been revised to be fully equity-funded, which Jefferies firm views as a strategic move that could enhance RXO's financial health.
In addition to the acquisition, RXO introduced a prepay feature for its RXO Fuel Card, offering drivers the ability to pre-fund their fuel purchases. On the financial front, RXO secured $550 million through private financing for the Coyote Logistics acquisition and amended its credit facilities, introducing a new $200 million delayed draw term loan facility, and extending a $600 million revolving credit facility.
Analysts have also weighed in on RXO's recent activities. Jefferies maintained its Buy rating on RXO, while Susquehanna raised RXO's stock price target to $20.00 but maintained a Negative rating. Similarly, TD Cowen maintained its Hold rating on RXO, raising the price target to $28.00. These recent developments underscore RXO's ongoing operations and strategic planning.
InvestingPro Insights
In light of RXO's recent acquisition of Coyote Logistics, investors and market watchers are keenly observing the company's financial metrics and performance indicators. According to InvestingPro data, RXO currently has a market capitalization of approximately $4.06 billion. Despite facing a revenue decline of 10.26% over the last twelve months as of Q2 2024, RXO has managed a gross profit margin of 18.3%, a figure that reflects the company's ability to maintain profitability in challenging market conditions.
InvestingPro Tips suggest that RXO's net income is expected to grow this year, which aligns with the company's strategic expansion through acquisition. Moreover, the stock is currently in oversold territory according to the Relative Strength Index (RSI), indicating potential for a price rebound. This could be an opportune moment for investors to consider RXO, especially with analysts predicting the company will be profitable this year.
While RXO operates with a moderate level of debt, it has demonstrated a strong return over the last three months, with a price total return of 28.12%. Notably, RXO does not pay a dividend, which may be a consideration for income-focused investors. For those interested in more detailed analysis, InvestingPro provides additional insights and metrics, including 10 more InvestingPro Tips for RXO, available at https://www.investing.com/pro/RXO.
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